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The stock market gave back some gains over the last month, as Wall Street weighs the effect of President Donald Trump's tariff policies on the economy. But no matter what happens in 2025, the adoption of artificial intelligence (AI) will continue.
AI is anticipated to add trillions to the global economy through labor productivity increases alone. Investors can take advantage of the market sell-off to build positions in leading chip companies that are enabling this generational shift. Here are two great stocks to buy now.
1. Nvidia
Nvidia's (NASDAQ: NVDA) chips have almost become the backbone of the economy. Cloud services can't operate without data centers, and Nvidia's graphics processing units (GPUs) are found in every major cloud company's infrastructure.
Nvidia has led the GPU market for 20 years, but it has continued to expand its offering to be a complete end-to-end solution for building data centers, or what Nvidia calls AI factories. In addition to its widely used H100 GPU and Blackwell computing hardware, it offers software, networking equipment, and services that have widened its competitive moat.
The company's financial performance shows how vital its technology has become for data center operators. Its total revenue doubled last year to $130 billion, with 88% coming from sales to data centers. The company expects to report roughly $43 billion in revenue for the fiscal first quarter of 2025, representing 10% growth over the previous quarter.
There have been concerns that AI researchers may start adopting lower-cost methods of training AI models, which could pressure Nvidia's revenue. This is one reason the stock is currently down 9% year to date. But Nvidia's new Blackwell computing platform just brought in $11 billion of revenue last quarter, and the company's Q1 revenue guidance indicates that demand for its products remains robust.
Analysts expect Nvidia to post revenue growth of 56% this year, while earnings are anticipated to increase 50%, according to Yahoo! Finance, yet the stock is trading at just 27 times forward earnings. That is a bargain for a company that's growing this fast and serving a vital role in the global AI infrastructure supply chain.
2. Taiwan Semiconductor Manufacturing
The surging demand for high-powered chips for AI workloads is playing right into the hands of the leading chip foundry. Taiwan Semiconductor Manufacturing (NYSE: TSM) has spent years perfecting the process of testing and manufacturing the most advanced chip technologies, so companies like Nvidia, Broadcom, and other leading semiconductor producers can focus on chip innovation.